Cashing in the digital dividend

The GSM Association’s (GSMA) Mobile World Congress takes place this month, with the spotlight firmly on how industry stakeholders intend to sustain growth during the global economic slowdown. GSMA’s incoming chief marketing officer Michael O’Hara tells Michelle Mills what he believes will be the defining topics at this year’s Congress

This year’s Mobile World Congress is likely to be used by many industry players to gauge just how exposed the telecoms sector is to the global financial crisis, and more importantly what impact recession is likely to have on the market moving forward. For its part, the GSM Association (GSMA), which represents more than 750 mobile operators and 200 manufacturers and suppliers in 219 countries, is looking to calm nerves of those who would suggest the global telecoms sector is facing tough times in the short and medium term.

“I think it is early days on the CAPEX forecasts, but we are hearing numbers from five per cent reduction over this year, while in other places we’re hearing about operators making a 10 per cent reduction,” comments Michael O’Hara, the GSMA’s chief marketing officer. “I think what is really key and what you will hear from the operators is that if they are given the spectrum to make an investment in mobile broadband technology, then they are ready to do that.”

O’Hara believes the number one topic at the Mobile World Congress is set to be the continuing growth of mobile broadband technology over the coming year, driven by the operator community campaigning for the availability of spectrum, known as the ‘digital dividend’, to be used for mobile broadband services. The digital dividend refers to the spectrum that is freed up when a country switches over from analogue TV to digital TV.

O’Hara believes the spectrum is core, offering long range coverage characteristics, at a relatively low cost of deployment. Most of the digital dividend spectrum is being released throughout the European Union, the UK, US and Canada; however, there are emerging economies like Nigeria, which are also in the process of releasing spectrum between now and 2012. In many countries, reviews of the planned use of the spectrum are being undertaken and in some places auctions are planned.

Of the spectrum that is being released, O’Hara expects that operators will call for at least a quarter of that spectrum to be made available for mobile broadband services that will enable the continued rollout of HSPA, as well as trigger much-needed infrastructure investment from operators.

The GSMA’s Michael O’Hara says that while the operator community is talking of CAPEX reductions of between five to 10 per cent, if it is given the spectrum for mobile broadband, it is ready to invest

The GSMA steers a mobile broadband initiative and is focussing on the development of a ubiquitous infrastructure that will connect the world’s population to the Internet, multimedia communications and other online services. Mobile broadband is currently integrated into 874 devices from 117 suppliers, with 200 HSPA networks across 93 countries.

“We have about 75 million HSPA subscribers today, but we expect that to run to about one billion subscribers by 2012. So we are expecting substantial growth rates for mobile broadband technology,” O’Hara says. “We also expect the price of HSPA modules that you fit to laptops to reduce in price by half from US$70 to US$35 over the next year. This means we can afford to fit these modules to more and more devices [such as cameras and MP3 players], which will fuel people to continue using mobile broadband technology.”

O’Hara adds that another key driver for mobile broadband is that networks are becoming faster, with 107 networks across the world allowing users to surf the Internet over the cellular network at speeds of up to 3.6Mbps. He believes this creates a viable alternative to Wi-Fi and fixed-line broadband access, again offering a potential source to trigger investment in order to drive service uptake.

O’Hara expects emerging market uptake of mobile broadband services shall remain high, saying with around 6.6 billion people on the planet and only 1.1 billion fixed-telephone lines, there are around five billion people in the world who will rely on mobile technology to access the Internet. The GSMA has highlighted the success of broadband deployments in a series of case studies published last September, highlighting examples such as the HSPA deployments of Vodacom in Tanzania and Dialog Telekom in Sri Lanka, as well as the Gramjyoti project in remote villages of Tamil Nadu in south west India.

While it is forecast that the economic downturn will result in a belt tightening programme on the part of operators, O’Hara believes the converse will occur, with there being growing interest in the initiatives and programmes that the GSMA promotes.

“Our operators are also looking at how to run a variety of services, and I think you’ll hear announcements at the Congress of initiatives in next generation messaging. For example, how you could use the contact list of the phone to really drive a variety of messaging techniques, and I think you’ll hear broad operator support for that initiative,” O’Hara predicts. “You’ll also hear us talk about mobile advertising and how the Association is working with operators and advertisers to create a win-win situation,” he adds.

Aside from mobile broadband, the other two key areas of development for the GSMA in 2009 will be building the concept of the ‘mobile lifestyle’ and the ‘mobile planet’, which will be reflected in the agenda of the Congress. Mobile lifestyle initiatives seek to deliver innovative, sticky, revenue-generating services such as instant messaging, search, video and mobile banking, as well as Internet-based applications combined with a mobile operator’s own assets.

Mobile planet focuses on leveraging mobile services to improve the lives of individuals around the world, and especially the requirements of individuals who live on less than US$2 per day. Announcements at the World Congress will include operators bringing services to emerging markets in an environmentally-sustainable manner, and green initiatives that will reduce wastage and consumption across the industry.

The line-up of speakers this year includes the usual collection of CEOs from the leading operators and technology providers from around the world, including – Vittorio Collao of Vodafone, Jon Fredrik Baksaas of Telenor, Cesar Alierta of Telefonica, Ralph de la Vega of AT&T Mobility, and Olli-Pekka Kallasvuo of Nokia. O’Hara expects 50,000 attendees this year, in the face of industry commentators suggesting the numbers would be down and nearer to the 30,000 mark.